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Bank of America's $2bn lawsuit against Bear Stearns set for court

A Bank of America lawsuit against Bear Stearns and two of its hedge-fund managers will go ahead after a federal judge refused to dismiss contract and fraud claims.

Bank of America is claiming more than $2 billion in damages, alleging that Bear Stearns's hedge fund losses were hidden from it, causing it significant losses as the value of the assets and the securities fell dramatically.

Hedge-fund managers Ralph Cioffi and Matthew Tannin are set to go on trial on October 13th 2009 in New York for their part in the alleged fraud.

The collapse of Bear Stearns's hedge funds in 2007 led to the investment bank's dramatic downfall that saw it sold to JPMorgan Chase & Co in May 2008 for just $10 a share.

Staff at the company, who owned almost 40 per cent of the shares between them, lost billions of dollars on their holdings, which had been trading at more than $150 a share in early 2007.

By Gary Cooper